Serious problems with student loans system

Shadow Universities and Skills Secretary, David Willetts, has today written to Lord Mandelson to seek assurances about reports that the student loans system is experiencing serious problems with processing applications.

Just weeks before the first payments are due to be made, many potential students have written to express their concern about inaccurate information, loss of documents and an unresponsive helpline.

These problems are reminiscent of recent Government fiascos over Educational Maintenance Allowance (EMA) payments and national curriculum tests.

The text of the letter is below:

"Dear Peter

I am concerned about the serious problems prospective students are facing in sorting out their financial support before starting university this month. I am receiving letters and emails on a daily basis from students and their parents who are finding it hard to obtain accurate information about their student support applications. The Government set up new arrangements for this year, including replacing Student Finance Direct with Student Finance England, and these do not appear to be working properly. There is a clear and substantial risk that new students will face serious financial problems at the start of the new university term.

Among the problems that people are experiencing are:

• a lack of useful information on basic facts like whether an application has started to be processed;
• insufficient information about the receipt and location of original personal documents;
• repeated website failures and no response from the helpline; and
• an absence of accurate information on their financial entitlement.

Because students need a financial settlement letter in order to start university, the problems look set to affect their ability to enrol at university as well as their financial situation. And those from less well-off households are affected worst of all, as they are entitled to income-related grants alongside the student loans.

Are you aware of these problems? What steps are you taking to tackle them? And are you able to reassure all young people starting university this autumn who applied before the deadline that they will receive their full loan and grant entitlement at the start of the new term?"

UKIP renews call for student grants

UKIP MEP Nikki Sinclaire has called for student grants to replace the current debt-making student loan programme.

"This is about investing in our future - why don't we take a share of the £45 million a day we waste on the EU to invest in our youth. Young people have enough to worry about – they should be concentrating on their studies and future not mounting debts," said Ms Sinclaire.

British undergraduates will on average owe around £5,000 for every year of study suggested a poll of 2,000 students. Freshers should expect to complete their first year of study with more than £21,200 of debt by the time they graduate suggested The Push Student Debt Survey.

Those starting degree courses this autumn could see their debt levels pushed to around £23,500. Students across England fare worse in contrast to their students in Scotland, Wales and Northern Ireland.

SNP ACTION TO TACKLE STUDENT DEBT

RECESSION WRONG TIME TO CUT SPENDING
Responding to a report from the National Union of Students which shows the main financial concern facing university students is the prospect of debt, and in particular commercial debt SNP MSP and Education Committee member Aileen Campbell said;

"This report shows that the SNP Government's decision to scrap the graduate endowment was exactly the right move. With debt coming out as students main concern the SNP's action to cut £2300 from that debt burden by abolishing Labour's graduate endowment fee shows the Government taking steps to help students get the best possible start in their working lives.

"Scottish students were failed by the Labour and Lib Dem administration with a lack of financial support which is why the SNP Government has announced £84 million to support Scotland's students. To tackle student debts the SNP has restored the principal of free education, increased hardship funding, reintroduced grants for part time and post graduate students and has invested support in independent learning accounts to help Scottish learners fulfil their potential.

"Alongside Government action to reduce debt it is important that the big banks who used extensive overdrafts and loans to students as a way to attract customers for life, treat students responsibly as they make the transition to from study to work in a difficult market.

"This report shows students will be affected by the UK recession and the financial concerns they face show that this is precisely the wrong time for the UK Government to cut £500 million of valuable investment from the Scottish budget."